China's 'Bold Move'

Everyone's been buzzing about how Moldova is being pulled apart by the gravities of Russia, the European Union, and neighboring Romania.

In May, the EU welcomed Moldova into its Eastern Partnership program, an act that Moscow denounced as a bid to set up a sphere of influence in Eastern Europe. Then last month, Moscow coughed up a $500 billion loan to the cash-strapped Moldova, Europe's poorest country.

But Louis O'Neill, former OSCE ambassador to Moldova, writes in an op-ed in today's "Financial Times" that a new player is entering the game: China. Beijing has upped the ante by giving Chisinau a $1 billion loan, a move O'Neill says amounts to "a direct challenge to the US and Russia for economic and political influence in the last outpost of elected Communist rule in the former Soviet Union."

O'Neill also says the talks with China may have been one reason why Moldovan President Vladimir Voronin was confident enough to send the International Monetary Fund (IMF) packing last month. He says Chinese construction firm Covec, which is the vehicle for the Chinese loan, has said "China can guarantee financing for all projects necessary and justified by the Moldovan side."

"This is a remarkable statement," O'Neill writes, "given that Moldova's gross domestic product is about $8bn, its budget is about $1.5bn and the country has stayed afloat, barely, thanks to remittances that are already down by a third in 2009. Covec does not seem particularly concerned about how this money will be paid back."

O'Neill sees "a confident China moving to outflank" Moscow and Washington "in a most unlikely area." He concludes that "China's bold move in Moldova shows once again that for it the whole world is now a 'near abroad.'"